Nippon Soda Group Integrated Report 2020
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Nippon Soda Group
Integrated Report 2020
For inquiries, views, and comments regarding the Integrated
Report 2020, please contact us via the following website.
https://www.nippon-soda.co.jp/e/contact/
Corporate Communication Section, General Affairs
Department, Nippon Soda Co., Ltd.
2-2-1, Ohtemachi, Chiyoda-ku, Tokyo 100-8165
Tel: +81-3-3245-6056 Fax: +81-3-3245-6238
Mission of the Nippon Soda Group Contents
Value Creation of the Nippon Soda Group
History of Value Creation 2
Create new value through the power of chemistry and
Message from the President 4
Value Creation Model 10
Source of Value Creation 12
Explanation of Strategy
increase corporate value by contributing to society. Explanation of Strategy
Long-Term Vision
Megatrends and Materiality for
16
18
Increasing Corporate Value 20
Business Strategy 22
Materiality Feature 24
The Nippon Soda Group’s Businesses 28
Foundations for Value Creation
ESG Management 42
Human Resources Strategy 44
Environmental Protection 48
Process Safety and Disaster Prevention 50
Occupational Safety and Health 51
Logistics Safety and Quality Assurance 52
Chemicals and Product Safety 53
Relationship with Local Communities
and Dialogue with Society 54
Corporate Governance 55
Compliance 60
Internal Controls 61
Business and Other Risks 62
Messages from Outside Directors 63
Directors and Executive Officers 64
Financial Data and Corporate Data
10-Year Financial and Non-financial Highlights 66
Financial Review 68
Consolidated Balance Sheets 72
Consolidated Statements of Income 74
Consolidated Statements of Comprehensive Income 75
Consolidated Statements of Changes in Equity 76
Consolidated Statements of Cash Flows 77
Company Information /
Shareholder and Investor Information 78
Editorial Policy
Integrated Report 2020
comprehensively conveys the
corporate value of the Nippon
Soda Group and its medium- to
long-term goals, both financial and
non-financial. When producing
this Integrated Report, we strove
to provide an easy-to-understand
overview of our value creation
process by referring to the Guidance for Collaborative Value
Creation of the Ministry of Economy, Trade and Industry. From 2020,
Nippon Soda has replaced the conventional CSR Report with the
Integrated Report. The ESG information listed in the CSR Report
is now posted on the Nippon Soda website in a new document
entitled ESG Data Book.
Forward-Looking Statements
The Integrated Report lists forward-looking plans and strategies,
as well as forecasts and outlooks for business performance. Please
note that various factors may cause actual results to differ from
these forecasts and outlooks.
Nippon Soda Group Integrated Report 2020 01
History of Value Creation
Value Created
Since its founding in 1920, the Nippon Soda Group has diversified into business fields such as agriculture, healthcare,
the environment, and information. Furthermore, we have successively created products that meet the needs of the Research Organizations
times. By using the power of chemistry to solve the issues facing society and by creating value with an eye on the and development and human
future, we will continue to contribute to the creation of a society in which every person can live with peace of mind. Multiple businesses and production resources with
technology that Global network
in niche domains high awareness
create long-selling toward social
products contributions
Net sales for the
1913
Founder Tomonori Nakano received a
patent for the Nakano method of salt
electrolysis
1969
Started production of the
pharmaceutical additive NISSO HPC
Started production of the fungicide
1970
Started production of the resin additive
NISSO-PB
Started operations at the Nisso Kasei Chiba
* fiscal year ended
March 31, 2020 ¥144.7 billion
TOPSIN (thiophanate) Plant (currently the Chiba Plant; Ichihara City,
1920 Started operations at the Mizushima Chiba Prefecture)
Established Nippon Soda Co., Ltd. Plant (Kurashiki City, Okayama
for business activities related to the Prefecture)
manufacturing of caustic soda and Established the Agrochemical
bleaching powder Synthesis Research Laboratory
Started operations at the Nihongi (Odawara City, Kanagawa Prefecture)
Plant (Joetsu City, Niigata Prefecture)
1972
Began capital participation in Iharabras
S.A. Industrias Quimicas (Brazil) 2002
Established the R&D Laboratory for High-Functional
Materials (Ichihara City, Chiba Prefecture)
2004
1995 Acquired the agrichemical business of Dainippon Ink
Nihongi Plant and Chemicals (currently DIC)
Started production of the insecticide MOSPILAN
Agrochemical Synthesis Research (acetamiprid)
Laboratory
1934 1997 2010
Started operations at the Started production of the semiconductor photoresist Established the Chiba Research Center (Ichihara City, Chiba
Takaoka Plant (Takaoka City, material VP-POLYMER Prefecture)
Toyama Prefecture) Jointly developed the next-generation Faropenem- (Integrated the R&D Laboratory for High-Functional Materials
1984 sodium antibiotic together with Suntory Ltd. and and the Production Technology Department of the Chiba Plant)
Established the R&D Yamanouchi Pharmaceutical Co., Ltd. (currently Astellas
Laboratory for Functional Pharma Inc.), and started production of Faropenem-
Materials (Ichihara City, sodium antibiotic. 2011
Chiba Prefecture) Established Nisso Namhae Agro Co., Ltd., a joint
venture manufacturing company for active agrochemical
Established the Odawara
Changes in Research Center (Odawara
ingredients, in South Korea
Purchased Alkaline SAS, a French chemicals manufacturer
net sales City, Kanagawa Prefecture)
* Due to a change in accounting 2018
standards, net sales changed from 1991
Purchased the plant health
non-consolidated (Nippon Soda Co., Participated in the
business of Zoetis Japan
Ltd.) to consolidated as of 1999. establishment of Novus
Corporation
International, Inc. (USA)
Faropenem-sodium VP-POLYMER
antibiotic
1920 1945 1970 1995 2020
Founding Period Early Period Growth Period Development Period
(1920 to 1944) (1945 to 1969) (1970 to 1994) (1995 to 2020)
Changes at the
Nippon Soda As the demand for In order to respond to social changes
Group domestic chemical products during the period of high economic Looking to the future,
We promoted product development
increased, Nippon Soda growth, Nippon Soda embraced utilizing technology and established new the Nippon Soda Group creates new value and solutions,
adapted to the progress the challenge of development and growth fields in an uncertain era.
of science and drove the commercialization in various fields, and promotes further globalization.
industrialization of research. including existing and new fields.
1914 to 1918 1929 1939 to 1945 1954 to 1973 1973 1978 1985 2008 2012 2020
Social Trends
World War Great World War Period of high First oil Second oil Plaza Financial crisis European COVID-19
I Depression II economic growth crisis crisis Accord currency crisis pandemic
02 Nippon Soda Group Integrated Report 2020 Nippon Soda Group Integrated Report 2020 03
Message from the President
First of all, as the world continues to be impacted by recovery of people infected by COVID-19 and the end of
COVID-19, I would like to offer my heartfelt sympathy to the pandemic.
the families of those who have died. I pray for the early
Deep Gratitude for the Last 100 Years and Determination for the Next
100 Years
Nippon Soda celebrated its 100th anniversary in 2020. This our company as being comprised of “Good people doing
milestone was made possible thanks to the support of all good work.” As embodied by this statement, Nippon
stakeholders, including shareholders, investors, business Soda has overcome adversity through the united efforts
partners, employees including those of Group companies, of all executives and employees. Even in the midst of
and local communities. For this, I am extremely grateful. adversity, we have actively adopted innovative technology.
Moving forward, as a chemical manufacturer with operations We are proud of how we have advanced our research and
that are essential for achieving a more prosperous life, we development and used the power of chemistry to support
will strive to increase our corporate value with renewed the development of society.
determination. Even upon having reached our 100th anniversary, we
Since our founding in 1920, Nippon Soda has expanded will never become complacent; instead, we will invigorate
its business in various fields such as agriculture, healthcare, our activities and continue to contribute to society through
the environment, and information, and has launched diverse chemical technology. As we start the next 100 years, we
products that meet the needs of the times. Starting with have formulated the Nippon Soda Group Long-Term Vision
caustic soda, which was our main product at the time of “Brilliance through Chemistry 2030.” This Long-term Vision
our founding, we have used the power of chemistry to incorporates the future as envisioned by the Group and
create new value and have contributed to society through strategies for achieving that future.
our products. Our founder Tomonori Nakano described
Reflecting on the Previous Medium-Term Business Plan
During the three-year period from the fiscal year ended of 6.5%) and ROE (return on equity) was 4.8% (compared
March 31, 2018 to the fiscal year ended March 31, 2020, to the target of 7.0%), so we didn’t achieve either target.
sales of some products fell due to the impact of trade This was due to an increase in costs for the commissioned
The Nippon Soda Group has evolved over 100 years of friction between the US and China. The tightening of
environmental regulations in China has also significantly
testing of new pesticides, lack of progress in initiatives such
as M&A and other projects, and a decrease in the profits
turbulent change and has contributed to society through affected the Nippon Soda Group. For example, operations
were suspended at many plants in China, and the supply of
of Novus International, Ltd., which had contributed to the
improvement of our financial structure and the Group’s
the power of chemistry. This experience will serve as
products and materials has stopped. business performance.
Regarding the planned investment of ¥50 billion over a Furthermore, in response to the COVID-19 pandemic
three-year period, we made growth investments to increase that began to spread from the beginning of 2020, our Head
an invaluable asset for our Group going forward. the production of the pharmaceutical additive NISSO HPC Office, branch offices, and research institutes implemented
and semiconductor photoresist material VP-POLYMER, both measures such as teleworking and staggered commuting
We will continue to create new value for the of which sell well. In terms of investing in maintenance and times. At our manufacturing sites, we have taken necessary
renewal, we decided to make decisions based on a careful measures in accordance with the guidelines of each
next 100 years while responding flexibly to the examination of business feasibility. Even so, we ultimately applicable prefecture. Our sites have been operating almost
made investments that were essentially on the same scale as as planned. Moving forward, there is an urgent need for
changing times. the initial plan. Regarding M&A, we acquired the plant health business reforms that utilize AI and IoT, and for Company-
business of Zoetis Japan Corporation. wide workstyle reform. In response, we established the
Although sales were strong overall, ROS (return on sales, DX Promotion Group in April of this year and plan to do
Akira Ishii or operating margin) was 5.6% (compared to the target research into more efficient workstyles.
Representative Director, President
04 Nippon Soda Group Integrated Report 2020 Nippon Soda Group Integrated Report 2020 05
Although developing agrochemicals is a time-consuming profitability and efficiency. Furthermore, the Nippon Soda
Formulation of New Long-Term Vision: Megatrends and Business Domains process, we have been able to launch three new products* Group will invest ¥30 billion in new businesses and conduct
in succession. Because of the new launches and the capital investment for increasing production. We will work
Until now, from time to time the Nippon Soda Group has products and high added-value service functions in celebration of our 100th anniversary, a big milestone, we to achieve a dividend payout ratio of 40%, with an annual
used the slogan of “speed and change.” Today, society multiple domains. In view of these strengths, it is time for took the opportunity to announce our Long-Term Vision. dividend of ¥80 per share as the lower limit for shareholder
and economies worldwide are undergoing drastic changes. the Group to capture business opportunities in a broader First, in our Medium-Term Business Plan “Brilliance returns. We also plan to promote shareholder returns
Amidst such trends, every company needs to adapt with range of fields. through Chemistry Stage I” which started from April of through the flexible acquisition of treasury stock.
rapid speed. In addition, in the face of numerous issues When formulating our new Long-Term Vision, we began 2020, we are targeting profit of ¥7 billion and ROE of 5% * The fungicide PYTHILOCK (picarbutrazox) (also known as NAEFINE and
such as global environmental problems including food by considering how to decipher various global trends. As in in the period under review. By using the ROIC (Return on QUINTECT), the acaricide DANYOTE (acynonapyr), and the fungicide
MIGIWA (ipflufenoquin) were all developed in-house.
shortages due to population growth, abnormal weather the past, we remain committed to our policy of accurately Invested Capital) tree analysis, which we introduced in the
due to climate change, and marine plastic waste, we need ascertaining people’s needs and delivering the required previous Medium-Term Business Plan, each department
to rethink all styles of life and increase our awareness in the products and services to the world. We have also assessed will work to achieve its goals by continuously improving
face of threats such as the COVID-19 pandemic. the way in which the Group’s businesses should operate
When examining domestic conditions in Japan, it is amidst global trends, and identified the importance of
clear that a number of diverse issues need to be addressed. creating and providing new value in all domains based on Initiatives for the Four Materialities: Responding to New Needs
These issues include the declining birthrate and aging the advantage of our proprietary technologies. The Group
population, the growing problem of medical expenses, and has identified the following four megatrends: 1) population
Among the four materialities to be addressed in our Long- advantage of being applicable and essential to various
an increase in health consciousness. Moreover, it is highly growth and global warming, 2) improvement in living
Term Vision, our goal in the agriculture field is to contribute fields. In Japan, labor shortages have created the need
probable that values and lifestyles will continue to change standards and social security cost issues, 3) achievement
to ensuring food safety and security, and to achieving to improve the efficiency of agriculture. It is believed
and diversify with even greater speed. Concurrently, there of a sustainable society, and 4) progress in information and
sustainable agriculture. Although Japan has a declining that trends for utilizing ICT technology in agriculture will
will be a significant increase in demand for ICT (information communication technologies. We have also positioned the
birthrate, the worldwide population is increasing. Higher continue to advance.
and communication technology) that supports this four fields of agriculture, healthcare, the environment, and
safety is required for agrochemicals applied to crops. Of course, as a manufacturer, the Nippon Soda Group
diversification. Even though its main focus is on chemicals, ICT as materialities (important issues) for increasing the
However, at the same time, highly effective fungicides, has been engaged in environmental measures during
the Nippon Soda Group possesses high-performance corporate value of the Nippon Soda Group.
pesticides, and herbicides are needed to secure more the manufacturing process of all its products. In the
food. The Nippon Soda Group has established a structure environmental domain, we provide environmental solutions
that enables all processes to be performed in-house, from that utilize technologies for adsorbing and removing
Our Vision 10 Years in the Future: Transitioning to Management That Emphasizes Efficiency research and development aimed at pursuing new compounds, harmful substances, including the water treatment
establishment of manufacturing methods, and production/ technology and resource recycling technology obtained
The Long-Term Vision defines our vision 10 years in the to steadily implement measures for achieving our targets formulation of active ingredients utilizing organic synthesis through our environmental measures.
future as fulfilling the mission: “Create new value through and goals. The Nippon Soda Group possesses a variety of technology. Demand for agrochemicals is expected to remain Although the Nippon Soda Group has several unique
the power of chemistry and increase corporate value by businesses backed by its proprietary technology, and has a strong in the future, and the Nippon Soda Group will continue technologies, the failure to fully utilize those technologies
contributing to society.” As a basic strategy, we decided profit base that can withstand various risks. In order to make its ceaseless efforts for developing new active ingredients in has been an issue. In responding to needs in a broad
to emphasize investment efficiency (ROI). We are working further use of this strength that we refer to as “Nippon Soda order to contribute to the worldwide food supply. range of areas, we have handled numerous themes. There
to reform our business portfolio with the aim of creating Group Technology,” I want to enhance our R&D and expand In the healthcare field, we possess the pharmaceutical have been times in which we took on new challenges
a highly efficient business structure through growth it to peripheral development of existing technology. additive NISSO HPC, a product that is highly regarded in without delving sufficiently into the business aspects of
investment and structural reform. By accelerating the We will work to thoroughly increase the efficiency of the industry. The cellulose derivative that is a component technology utilization. From the perspective of improving
expansion of high added-value businesses with high profit our management, research, production, sales, and supply of NISSO HPC possesses excellent safety specifications. As profit efficiency, which is the basic strategy of the Long-
margins and the liquidation of unprofitable businesses, chains in an effort to strengthen cost competitiveness. We such, the application of NISSO HPC has begun in the food
we will promote thorough management efficiency. The will also strive to further expand our overseas businesses by products field (supplements), and Nippon Soda is preparing
Nippon Soda Group’s strategy is to generate stable cash in promoting the development of new markets. Our overseas to increase production capacity to meet the demand. In
our existing businesses, create new value in growth fields, sales ratio has always been high, coming in at 33% (fiscal conjunction with rising health consciousness, there are
and raise our profit efficiency to more than double the year ended March 2020). Nevertheless, in the future, we increasing expectations for technologies that make it
current level. Furthermore, we will increase corporate value will select target areas for expansion in anticipation of easy to take supplements, thus meeting the needs of the
by proactively implementing measures that emphasize further market growth. Furthermore, in order to promote healthcare field for a “healthy life to all people.”
a balance between investment in growth fields and innovation and increase our sophistication, we intend to In the ICT field, we utilize precision polymerization
shareholder returns. The management indices that we strive actively cooperate with external parties, as well as deepen technology and organic synthesis technology to provide
to achieve by 10 years from now are ROS of 10% or higher, and integrate our proprietary technologies. high-performance resins for communication equipment
ROA of 7% or higher, and ROE of 8% or higher. We had already begun to consider these strategies materials and semiconductor photoresist materials. In the
The Nippon Soda Group plans to divide the 10 years of while promoting the previous medium-term business plan. future, there are expectations for heightened demand
our Long-Term Vision into three stages, Stages I to III, to We have been making preparations while keeping track as full-scale introduction begins for the next-generation
formulate a Medium-Term Business Plan for each stage, and of trends in the business environment and current issues. communication system 5G. Additionally, ICT has the
06 Nippon Soda Group Integrated Report 2020 07
Term Vision, we will not insist on self-reliance; instead, we technologies in partnership with other companies. I also Nippon Soda is implementing personnel measures that mid-career hires attend the entrance ceremony of newly
will explore the utilization and development of technology believe that it is important to make more effective use of will trigger a change in thinking; for example, dispatching hired graduates. The fluidity of human resources is expected
in collaboration with external parties, and will increase the our proprietary technologies by strengthening their linkage engineers to university laboratories to engage in industry- to increase in the future. By flexibly responding to diversity,
sophistication of technology by incorporating peripheral to the development of our business. academia collaboration and giving them the experience the Nippon Soda Group aims to create a bright and vibrant
of being stationed overseas for work from a young age. workplace environment, where ideas can be shared across
Furthermore, we are working to secure the required human organizations, and where vitality is the norm.
Building on the Intertwined Concepts of Corporate Value and Social Value resources through mid-career hires. Additionally, in order to instill our Long-Term Vision, it
Our overseas sales ratio is high, and we are actively hiring is necessary for all Group companies to work together to
foreigners in light of future overseas expansion. We are heighten their ability to execute. I would like to enhance
In a changing society and global environment, the Nippon activities that emphasize safety, the environment, and
also hiring an increasing number of women. The number the sense of unity in our Group by promoting personnel
Soda Group aims to conduct management based on the quality. From there, we developed CSR activities that are
of employees with diverse educational backgrounds and exchanges and standardizing paperwork between Nippon
two concepts of increasing social value and increasing based on social contribution.
life experiences is increasing. Therefore, I believe that it is Soda and each consolidated company, and among
corporate value through business growth. At first glance, it At present, ESG, which includes corporate governance
necessary to cultivate a sense of unity and cooperation; for consolidated companies.
may seem contradictory to focus on improving business in addition to CSR, is listed as an investment index. There
example, facilitating the building of relationships by having
efficiency while also considering the environment and is now a need for corporate management from a broader
providing value to society as a whole. However, if either of perspective. As a matter of course, the Group is responding
these concepts is not fully pursued, the Nippon Soda Group to these changes in accordance with the Corporate
will not be able to realize its management philosophy nor to Governance Code. From 2020, to further enhance our
Inheriting Tradition and Achieving New Growth through Change
achieve its Long-Term Vision. It is important for the Nippon governance activities, we have transitioned to a company
Soda Group to expand businesses by developing the with an audit and supervisory committee. Although 100 years is a major milestone, it is also just a City in Toyama Prefecture, it is not uncommon for many
products that will contribute to society, and in so doing lead The same also applies to the Sustainable Development point in time. As a company, it is important to continue generations of the same family to work as employees for the
to increased corporate value. Goals (SDGs). The SDGs consist of 17 goals. Multiple goals to grow while embracing new challenges. There is no Nippon Soda’s Group. High loyalty to the Company is an
Japanese chemical manufacturers have contributed to can be applied to a company that engages in a range guarantee that our business will continue just because invaluable asset. We will continue to meet the expectations
the development of the Japanese economy since the end of business activities. This means that the appropriate we have survived the last 100 years. In order to continue of local communities and contribute to their development.
of World War II. Conversely, these manufacturers are also perspective must be implemented from the development contributing to the creation of a sustainable society in which We will respond to shareholders and investors by working
responsible for causing environmental issues in conjunction stage. The perspective cannot be incorporated at a later each individual can live with peace of mind, all officers to improve capital efficiency, with the aim of securing both
with the growth of their businesses. For more than 20 years, stage. Regardless of how outstanding or technologically and employees must work together. We must all strive to growth investment and returns to shareholders. With this in
the Nippon Soda Group has been working on measures innovative the developed product may be, we must never increase corporate value while creating businesses and mind, it is extremely important to use the three years of the
as a manufacturer. One example is responsible care (RC) overlook this perspective. products that will contribute to society with the perspectives new Medium-Term Business Plan to establish a firm foothold
of SDGs and ESG. for achieving our Long-Term Vision. Based on the sense of
In addition to the production technology that has been urgency inherent in the expression “without change, there
Reform of Employee Awareness is Essential for Achieving Goals inherited as a company tradition, the relationships of trust is no future,” the Nippon Soda Group will make the utmost
that the Nippon Soda Group has cultivated with the local efforts to achieve its goals.
community are an important intangible asset. In areas Please expect great things during the next 100 years of
In addition to achieving our Long-Term Vision, it is most these concepts, reflecting those concepts at the actual
where factories are located, such as Nihongi City in Niigata the Nippon Soda Group.
important that we respond to social demands in areas such business site, and working toward goals. We have set
Prefecture (the birthplace of our company) and Takaoka
as ESG and the SDGs by harnessing the power of each ambitious goals in our Long-Term Vision. It is important that
employee, making sure they understand the meaning of all employees share the spirit of those goals and recognize
their role in achieving the goals. In particular, I would like
the employees who will guide us in the future era to work
with the spirit of taking the initiative for laying a foundation
for the next 100 years. Representative Director, President
Naturally, I will serve as a leader for the Nippon Soda
Group. Creating an environment for all employees to work
on this effort together is an important issue. In particular,
in regards to human resource development, we have been
reviewing the education system centered on OJT (on-the-
job training) over the past four years, and are promoting a
system to support career development. In this system, the
employee and the Company work together to set goals for
careers. If a business requires innovation, the organization
also needs human resources who are capable of innovation.
08 Nippon Soda Group Integrated Report 2020 09
Value Creation Model
Based on our mission, “Create new value through the power of chemistry and increase corporate value by
contributing to society,” the Nippon Soda Group will improve its corporate value and social value by providing
chemicals and related services for resolving social issues, and will build value creation processes that achieve
sustainable growth.
Local Shareholders
Business
Customers communities and Investors
partners
Long-term trust Safety and
Fair environmental Increase
transactions protection social
value
P. 42
Megatrends Input capital Business activities Output Outcome
Financial capital Medium-Term Business Plan ROS
Stage I “Brilliance through Chemistry” Stage I P. 16 to 17
Our Vision 10 Years in the Future
“Brilliance through 10.0% or more Mission
· Ability to create stable P. 18 to 23
Numerical Targets
cash flow Chemistry 2030” P. 20 · 24-27
· Resilient and healthy ROA
Create new value through the
Net profit ¥7.0 billion [Basic Strategy]
financial structure 7.0% or more power of chemistry and increase
Through growth investment that emphasizes ROI corporate value by contributing
· Owned capital
5% Stage II Stage III and thorough structural reforms, ”Transition to a Highly to society.
¥141.3 billion ROE
Efficient Business Structure—Raise Our Profit Efficiency ROE
Population growth (March 31, 2020)
to More Than Double the Current Level”
Increase in food and ¥30.0 billion yen for new 8.0% or more
Capital businesses and increased
feed production
and improvement of
Manufacturing capital expenditure
[Main Issues] Agriculture
production · Enhancement of cost competitiveness and efficiency Expansion of high-
production efficiency
· Capital investment for · Expansion of overseas businesses added-value businesses
Shareholder Dividend payout ratio 40% ·P romotion of new product development and entry and liquidation of Securing food and
Global warming new businesses and (However, the lower limit is an annual
return into new businesses unprofitable businesses sustainable agriculture
Increase in the incidence increased production dividend of ¥80 per share)
of crop pests and
diseases ¥30.0 billion Overseas sales ratio
(Medium-Term Business Plan: Target for March 31, 2030
Improvement in living Stage 1)
P. 12 to 13 40%
standards
Increased demand for Intellectual capital
pharmaceuticals and A sincere and flexible Sophistication of core
improved QOL · Research and development organizational culture technologies
for creating high added-
Social security cost
issues value products Promotion of new
product development
Healthcare
Increasing health · Production technology /
consciousness and awareness Unique proprietary core P. 14 to 15 Creating products and entry into new
of preventive medicine businesses
technology with real value Healthy life to all people
· Owned patents Agro Products Providing products and
Chemicals services required by
Research and
2,549 P. 30-33 P. 34 to 37 development
customers and the social
Achievement of (March 31, 2020) Agriculture environment in the 2020s
Healthcare
a sustainable society capability
Reduction of
environmental burden
Responses to climate
Building a resource Human capital change issues
recycling-based society
· Number of employees
(Consolidated): Environment
ICT Environment Preservation of
2,744 biodiversity
(As of March 31, 2020) Toward a resource
Dialogue with recycling society
Progress in information Social capital consumers, business
and communication Other Other businesses Trading partners, and local
technologies · Overseas sales ratio: P. 14 to 15 communities
Popularization of smart devices P. 39 P. 38
Rising needs for technological 33.4% Transportation
and Promotion of diversity,
innovation Production technology Construction Warehousing
work-life balance, and
Resource capital capabilities that create safety, P. 39 P. 38 career program
security and stability
· Energy consumption (in Hold constructive dialogue with
crude oil equivalent) shareholders and investors, and
disclose information in a timely ICT
93,100 kL and appropriate manner
(Year ended March 31, 2020)
* Nippon Soda (Non-consolidated) Applying the
· Amount of water Enhancement of functionality of
Increasing Corporate Value corporate governance
consumption chemicals to IT devices
16,700,000 tons ESG Management
(Year ended March 31, 2020)
P. 42 to 43 Promotion of
*Four domestic plants of Increasing Social Value compliance
Nippon Soda management
10 Nippon Soda Group Integrated Report 2020 Nippon Soda Group Integrated Report 2020 11
Source of Value Creation—DNA of Nippon Soda
The source of value creation at the Nippon Soda Group is found in our research and development, our technical
capabilities that have responded to changing market demands with the times, and the human resources who have
supported the aforementioned work. When thoroughly examining our achievements, you can see that the strength
and concepts of our founding spirit have been inherited and continue to thrive.
Even in today’s era of diverse change and the never-ending wave of issues, growth at the Nippon Soda Group is
supported by our DNA of having confidence in our ability to determine the correct path forward without wavering
from our convictions, and by our passion for research and technology aimed at solving difficult challenges one by one.
Origin of the Company Emblem The Company emblem for Nippon Soda is a snow rabbit. Specifically, it is a white hare surrounded by a hexagonal snowflake.
The emblem is based on the following episode. In the winter of 1920, shortly after the Company’s founding, a meeting was
being held at the Nihongi Plant in Niigata Prefecture in regards to the logo to be used on product containers. Suddenly, a
pure white rabbit jumped into the room, ran around, and then disappeared outside.
At that time, our Company’s main products were caustic soda and bleaching powder. In the case of these products, a
higher purity results in a purer white color. Therefore, the pure white rabbit represented the high quality of our products.
Furthermore, rabbits excel at running up mountains but not running down. This was a perfect symbol of Nippon Soda at
that time, in terms of how we were striving to become a growth company with high-quality chemical products that are not
affected by recessions. The six sides of the hexagonal snowflake represent the following ideals: honesty, industriousness,
originality & ingenuity, cooperation, service, and gratitude.
This is a perfect anecdote for Nihongi City, Niigata Prefecture, which receives some of the heaviest snowfall in Japan.
Furthermore, this episode is linked to the world of chemistry, where facts, chance and ideas are all linked together.
Heritage from the History of Our Company
Although favorable conditions did not exist at the time of our founding,
we were able to overcome adversity thanks to our people. From our founding to the present, a large number of forced to abandon the plan. The plan was ahead of its
Nippon Soda was founded in 1920, a period of great recession after World War I. Furthermore, many more difficulties were outstanding engineers have supported the growth of time and was eventually recognized and highly evaluated
lying ahead. Conversely, it was also an era when Japanese industry was heading for development. The unceasing efforts for Nippon Soda and enabled us to come back from difficult as having played a leading and enlightening role in the
improvement, innovation, and research and development led to the development of today’s Nippon Soda Group. These predicaments. Of course, Nippon Soda contributed to petrochemical industry.
the rapid expansion of business in the era when the Nisso After that, Japan entered a period of high economic
efforts were supported by our people. The spirit of “Good people doing good work” is still alive even today.
Konzern was formed in the 1930s. Afterwards, we were growth. Even though Nippon Soda’s sales grew, we
placed under military supervision as Japan moved toward continually failed to secure profits due to the interest
Words from our founder Tomonori Nakano World War II. We also experienced an era in which we were burden associated with large capital investments. Under
forced to respond to development requests in various fields. these circumstances, engineers focused their research and
“In no way does the Nihongi area present any advantages for industry in terms of transportation, terrain, One such example was the construction and operation of development in a new direction; namely, on fine chemicals
a caustic soda and bleaching powder factory in Malaysia. such as pesticides and polymer fields centered on urethane.
or supply and demand. Furthermore, during one-third of the year, the area suffers from heavy snow that
There is an anecdote that says when the German airship We promoted a shift from quantity to quality. These
completely buries homes. Shortly after our founding, Nippon Soda faced the Great Depression after World Zeppelin flew to Japan and landed in Kasumigaura City efforts eventually led to the creation of high added-value
(Ibaraki Prefecture), Nippon Soda was responsible for the products. The products developed in this era included the
War I. There was no conglomerate backing our company. Indeed, Nippon Soda was founded in a very
emergency supply of depleted high-purity hydrogen. At long-selling large-volume product TOPSIN-M (thiophanate-
disadvantageous era. Nevertheless, we were blessed with one thing—the human element. Our employees that time, only Nippon Soda was able to supply such a large methyl), which is used as a fungicide all over the world, and
joined together and worked with great devotion. Even though I was a managing director, the factory amount of high-purity hydrogen. the liquid polybutadiene NISSO-PB, which attracted the
After World War II, GHQ (Supreme Commander for the attention of the industry due to the novelty of its proprietary
manager and I would don dirty clothes and crawl under the machines. We worked both day and night.
Allied Powers) permitted Nippon Soda to restart through manufacturing method and still enjoys expanding use
Thanks to these efforts, we were able to build outstanding products and launch them on the market. It division of the company. The Company continued to face even today. Furthermore, we started producing the
difficulties because it was not clear which products and pharmaceutical additive NISSO HPC (hydroxypropyl
was also fortunate that we worked in the chemical industry, which had the highest demand of any industry
business fields would replace munitions, and large-scale cellulose) on a small scale.
in Japan. It can also be said that we possessed an exceptional spirit toward business and policy toward personnel reductions were necessary. However, even The Nippon Soda Group has been willing to invest in
management. under these circumstances, the Company was committed technology even in difficult times, and our engineers have
to launching new businesses. In 1950, we submitted worked hard to develop new products, strengthen cost
The chemical industry must constantly adapt to advances in science and evolve into more efficient Japan’s first petrochemical business plan to the Ministry competitiveness, establish overseas production technology,
methods. We have always maintained our commitment to improving and innovating our equipment and of International Trade and Industry (currently the Ministry and reduce environmental burdens. This spirit has been
of Economy, Trade and Industry). Our plan to produce inherited as the DNA of the Group and is the driving force
operation, and to researching and industrializing new products. In some areas, our business moved ahead
petrochemicals such as ethylene oxide and ethylene glycol behind all that we have accomplished.
of the science. Even when the existence of our company was in danger due to extreme financial difficulties, via the naphtha decomposition method was approved The Nippon Soda Group will “contribute to society
by the Ministry of International Trade and Industry. through the power of chemistry” and realize a future of
we actively encouraged these kinds of technological advancements. “Good people doing good work.” This
Nevertheless, due to the pioneering nature of the plan, “Brilliance through Chemistry” based on technological
was the greatest strength of Nippon Soda. As a result, we were able to overcome our inconvenient location, we were unable to receive financing from banks and were capability and passion.
damage from snow, and industry stagnation.
“Celebrating the 20th Anniversary of Our Company” (Nippon Soda Company Newsletter; May 1940)
12 Nippon Soda Group Integrated Report 2020 Nippon Soda Group Integrated Report 2020 13
Source of Value Creation—Power of R&D and Production
The Nippon Soda Group is embracing the challenge of creating new businesses that solve global issues. We have Toward the Creation of New Themes
positioned the four fields of agriculture, healthcare, environment, and ICT as priority fields. Based on the keywords
of “fusion of knowledge,” “fusion of technology,” and “global,” our two core research institutes and the production
technology research centers located in each plant serve as important bases that support value creation. Nippon Soda is constantly exploring new research themes. In Research Theme Selection Process
2019, we established a Theme Council which cooperates closely
Discuss the progress of research
with research departments and sales departments in order to
Select theme (Theme Council)
(Theme Evaluation Meeting)
review the possibility of commercialization while considering
Business decision made
market trends, etc. In this way, we decide on the selection of
by management
Consider theme
research themes. Regarding the progress of research, based on
factors such as changes in the external environment, discussions
are held on the continuation and acceleration of research at the
Theme Evaluation Meeting.
Moreover, we are promoting the search for future themes in
collaboration with external institutions such as other industries
and academia, based on the recognition that it is necessary
to utilize not only internal resources but also external research
resources and technologies.
Toward the Application Development of Core Technologies
The Nippon Soda Group possesses many excellent core
technologies. However, when considering future market
Establish/strengthen
needs and changes in the social environment, it is essential to
introduce new technologies, as well as to establish and further
strengthen core technologies. Therefore, we will strengthen our
technological marketing capabilities, broaden our assessment
and understanding of new needs, and establish a system that
can respond more flexibly. Introduction
Technology
of external
Research and Development Production We analyze the patent trends of other companies and marketing
technology
search for new possibilities while staying alert to trends in even
more areas. For example, we examine whether or not there
By effectively utilizing the fundamental
technologies and core technologies We have built a safe, stable, and efficient
are any aspects of commercially available products that can be Core
substituted by the Group’s technology. On top of that, we will technologies
that we have accumulated over production system It is based on create new value by improving and increasing the sophistication
the past 100 years, our research the development of proprietary of our proprietary technologies, and by developing new
and development handles the following manufacturing technologies through technologies while cooperating with external parties.
three areas: 1) development of the repeated improvement of the
new products, 2) the technological production technology we have
Promotion of Digital Transformation
improvement of existing products, and cultivated over a century.
3) the development of peripheral markets.
Nippon Soda has launched an AI working group to consider construction of databases.
The Odawara Research Center, which plays a central We have production technology research centers at various initiatives for digital transformation. In terms of In terms of production, Nippon Soda is working to rationalize
role, promotes research and development centered on our Nihongi, Takaoka, Mizushima, and Chiba plants. In material development, we are striving to create a system for work, save labor, and create a system that will enhance safe and
agrochemicals, while the Chiba Research Center conducts addition to establishing mass production technology for efficient research and development by introducing materials stable operation. We will also promote the development of AI
research and development in the field of chemicals such as newly developed products, we are engaged in various
informatics* with the aim of using AI to strengthen data human resources that can support these technologies.
functional materials and electronic materials. technological developments and engineering research.
science. Regarding the development of agrochemicals, we
In the development of agrochemicals, we For example, one of our strengths is how we improve
have been working on machine learning for supporting the * Efforts in which informatics methods that utilize statistical analysis, etc., are used to
are accumulating a track record of technological existing production processes and develop proprietary
improvements that will lead to the development of new manufacturing technologies with high productivity in creation of new chemicals. In order to further strengthen these search for new materials from a large amount of data
products. The Nippon Soda Group possesses a research collaboration with research departments. initiatives, we will proceed with digital transformation and the
system that can advance all phases from basic research to In 2019, in opening a new research building that
field experiments. We have the major advantage of being consolidates and integrates research facilities at the COLUMN
able to carry out highly efficient and swift research and Takaoka Plant, we established a system to enable
development, and product development that combines efficient use of testing equipment and human research MOF development together with Rikkyo University Passing on production technology
evaluation and exploration. resources. The Nippon Soda Group is also accelerating
For the development of chemical products, we have product development by strengthening synergies with In July 2020, as a result of an industry-academic collaborative project Over a period of 100 years, the Nippon Soda Group has accumulated
established an integrated system for all stages from the manufacturing process knowledge and manufacturing with Rikkyo University (group with Dr. Mao Minoura from the Chemistry various production technologies and know-how. We believe that it is
development of functional chemical products that make know-how, and by improving operational efficiency. Department of the College of Science), we were able to announce the important to pass down technology and know-how while continuing
full use of our proprietary technologies to research for Each research center supports a safe and stable development a new material with a metal-organic framework (MOF) to make further improvements. Additionally, for more than 10 years
commercialization and streamlined improvements. production system and complies with all applicable laws that is functional and porous. This new material is attracting great now, we have provided opportunities for each technical department
Both of the aforementioned centers conduct research and regulations, while paying attention to occupational attention. The Nippon Soda Group has been developing agrochemicals to cooperate and exchange information in the form of manufacturing
and development in cooperation with various departments safety and health. using hydroxamic acid derivatives for many years. This technology was process research meetings and production technology research
such as marketing, technical services, and manufacturing, also used in this industry-academic collaborative project. The mass meetings. These meetings also provide an opportunity to discuss
while working to improve the technological capabilities of production of new MOFs with less environmental impact is expected. production technology and are held throughout the entire Group.
each department. Our Group will promote industrial application.
14 Nippon Soda Group Integrated Report 2020 Nippon Soda Group Integrated Report 2020 15
Explanation of Strategy
efficient business structure. peripheral businesses. However, management decisions
From the perspective of the forecasted future demand regarding the caustic potash business were made from the
and the investment required for maintenance and renewal perspective of transforming to a highly efficient business
of equipment, there are products and businesses for which structure, which is the basic strategy of the Long-Term Vision.
difficulty in achieving medium- to long-term growth is In parallel with the liquidation of such unprofitable businesses,
expected, even though those products and businesses were Stage I will include growth investment of ¥30 billion with the
With a financial strategy that developed according to market needs. In Stage I, the Nippon aim of achieving high profitability. The core of these initiatives
Soda Group will make decisions on the liquidation of such is investment in equipment to increase production of the
emphasizes investment efficiency, products and businesses, thus making a major shift toward pharmaceutical additive NISSO HPC and mass production
we will aim for “Brilliance through asset efficiency. In August 2020, we announced that we would equipment for the new fungicide MIGIWA (ipflufenoquin)
implement fundamental reforms to the business structure of at the Nihongi Plant. Furthermore, it also includes regular
Chemistry.” the caustic potash business including the discontinuation of maintenance and renewal investment. Therefore, the capital
production. The caustic potash business started with production investment for Stage I will be quite large. These are investments
at the Nihongi Plant (Joetsu City, Niigata Prefecture) in 1929 that will enable us to achieve restructuring into a highly efficient
Kiyotaka Machii and supplied products for over 90 years while strengthening business, which is the subject of Stage I.
Director
Executive Managing Officer
CSR Promotion, and Internal Control & Audit Dept.,
Secretariat Dept., General Affairs Dept., Capital Policy in Stage I is Aggressive Investment for Growth and Shareholder Returns
Finance & Accounting Dept.,
Responsible Care Management Dept. and
Manager, Trade Administration As discussed above, the plan for Stage I calls for growth payout ratio at 40%. Also, Nippon Soda set a dividend lower
investment of ¥30 billion. This is a significant increase from limit for the first time. During Stage I, the lower limit for the
the ¥10 billion in the previous medium-term business plan. annual dividend will be ¥80, regardless of earnings results.
However, I believe that this investment is necessary in order Furthermore, we began purchasing treasury shares to a
to steadily implement our strategy and achieve our Long- maximum of ¥5 billion from February 2020. Moving forward, we
Term Vision. Furthermore, from the perspective of investment plan to proceed flexibly with implementation.
efficiency, we plan to reassess assets, including cross-held Continuing on from the previous medium-term business
Toward a Financial Strategy That Emphasizes Investment Efficiency shares, and manage the balance sheet appropriately. Also, plan, we are proceeding with efforts to identify issues and
in Stage I, we will take active measures to return profits to implement countermeasures by performing tree analysis
During repeated discussions and reviews held when formulating Looking at our shareholder composition, the ratio of foreign shareholders. Previously, the shareholder return policy was of the ROIC (return on invested capital) index, and then to
the Long-Term Vision “Brilliance through Chemistry 2030,” we shareholders is increasing, and we need to respond to their based on the total return ratio, which included the acquisition use the analysis results to improve ROE through continuous
referred back to the previous medium-term business plan, as demands. of treasury stock. However, in Stage I we set the dividend improvement of profitability and efficiency in each department.
well as to past management strategies and their results. By First, in order to instill ROI orientation in the awareness of all
doing so, we reconsidered what management indices require our employees, we focused on the concept of ROA. In other words, Numerical Targets
attention. Until now, we have been developing measures using we will improve business operations from the perspective
Indices Numerical Targets (FY 2023)
a P&L orientation that centered on sales and profit. However, of whether or not assets are generating appropriate profits
upon returning to the starting point for increasing corporate from investment, and whether or not we are improving profits
value, we arrived at the conclusion that the concept of “investing through efficient utilization of assets. The result of these efforts Net profit ¥7.0 billion (¥6.76 billion for FY 2020)
and earning profits,” that is, ROI (return on investment), should is improved ROE. Investment efficiency means we will revise
be our basic strategy when formulating our Long-Term Vision. our business and product portfolios from the perspective of
We also decided on the need to execute measures based on asset efficiency, and as we improve operational efficiency, our
ROI to realize a management plan that provides the ROE (return balance sheet will be streamlined, resulting in higher ROS and ROE 5% (4.8% for FY 2020)
on equity) that is demanded by today’s economic society and increasing ROA. Moreover, we will raise ROE by proactively
by investors. We will divide the 10 years covered by the Long- implementing policies that emphasize the balance between
Term Vision into three parts. We will then formulate and execute growth investment and shareholder returns, while giving Investing ¥30.0 billion in capital investment
Capital expenditure
medium-term business plans for each part based on activities consideration to financial soundness. In “Brilliance through in new businesses and to increase production
for improving ROI. Of course, unpredictable situations will arise. Chemistry Stage I,” we plan to achieve ROE of 5%. Then, in our
However, we will achieve improvements through trial and error. Long-Term Vision, we will achieve an ROE of 8% in 10 years. Dividend payout ratio 40%
Our final goals for 10 years in the future are ROS (operating We seek to increase asset efficiency and manage the Company Shareholder returns
(However, the lower limit is an annual dividend of ¥80 per share)
margin) of 10% or more, ROA (operating profit ÷ total assets) of even more efficiently, thereby promoting a shift to a highly
7% or more, and ROE of 8% or more. efficient business structure and increasing corporate value. * Each department will improve ROIC (return on invested capital) by continually improving profitability and efficiency, thereby improving ROE.
Stage I for Solidifying the Foundation of the Long-Term Vision The first step of the current Long-Term Vision “Brilliance The capital policy in Stage I also incorporates unprecedented
through Chemistry 2030” is the Medium-Term Business Plan shareholder return measures. First of all, in preparation for
In the Long-Term Vision, the first Medium-Term Business Plan will solidify our foundation for increasing corporate value. “Brilliance through Chemistry Stage I.” The strategy of this achieving our goals over the three years, all officers and
(FY 2021 to FY 2023) is entitled “Brilliance through Chemistry In Stage I, we will begin by liquidating unprofitable stage is clearly distinct from past management strategy, and employees will work together and reaffirm their conviction.
Stage I.” As the first step in achieving our Long-Term Vision, we businesses and establishing a system for adoption of a highly indicates our strong aspiration and conviction as a corporation.
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